Mike Gatto’s AB 227 Is Just the Second Prop. 65 reform in nearly 30 years; Will Help Businesses Avoid Unfair Lawsuits
Assemblyman Mike Gatto’s legislation to reform Proposition 65 and protect small businesses from meritless lawsuits was signed into law by Governor Brown on Saturday. The bill, AB 227, would allow small-business owners who receive notice of a technical Prop. 65 signage violation to achieve compliance within fourteen days and pay a small civil fine. If the business owners comply, they would be safe from legal action — including Prop. 65’s crushing $2,500 per-day retroactive fine, plus legal fees, and the stress of battling unfair litigation.
AB 227 succeeded against very long odds. It is the first bill to substantively amend Prop. 65 in nearly fifteen years, and only the second one in history. This is because reforming Prop. 65 requires a two-thirds supermajority vote of the Legislature, a very high bar that requires clear consensus.
“This bill won’t halt all Prop. 65 lawsuits, but will halt almost all unjust Prop. 65 lawsuits,” said Gatto.
AB 227 essentially provides for a “fix-it ticket” for violations based on the most common, everyday substances covered under Prop. 65, such as alcoholic beverages or those that naturally occur when grilling food. These are the substances (coffee, beer) that spark outrage when the public learns that a business is facing steep fines or closure due to a lawsuit over the same. The idea for the legislation came from Assemblyman Gatto’s Small Business Advisory Commission, formed in 2012 to advise him on challenges facing local small-business owners. In May, following the exposure Gatto and his Small Business Advisory Commission brought to this issue, Governor Brown announced his support of reforming Prop. 65.
“I am proud to have brought together groups that are normally on opposite sides of this issue, to craft a common-sense bill that will help California businesses avoid costly litigation, while ensuring that the public still gets prompt and proper warnings,” said Gatto. “It’s not every day that business groups, environmental-justice coalitions, organized labor, and attorneys’ organizations agree on anything, much less how to reform Prop. 65 — a measure that has been nearly impossible to amend since its approval in 1986.”
“AB 227 will go a long way towards saving thousands of California businesses from unnecessary legal action,” continued Gatto. “Threatening a small business with a lawsuit for serving its customers coffee with their breakfast, a burger with their lunch, or a glass of wine with dinner is absurd. Most business owners work hard to follow the law and protect customers so they return. This is especially true with the majority of our local business owners, whose customers are neighbors, friends, and relatives.”
Prop. 65 was passed by initiative in 1986, and requires warnings for a long list of products. The act was intended to prevent and warn the public about possible exposure to major carcinogens, for example, a toy that contains lead. However, recently, unscrupulous individuals have taken advantage of malleable provisions in Prop. 65 to ensnare small businesses in lawsuits that were never contemplated in the original law.
In the last several months, more than two-dozen brick-and-mortar businesses in Southern California, including several popular restaurants and cafés, have been threatened with lawsuits for simply neglecting to have posted signs (or signs of the correct size), that warn about beer, wine, or chemicals that result from the natural process of cooking food. Some businesses have paid settlements of $10,000 or more to make the suits go away quickly.
“AB 227 strikes a balance by helping businesses avoid senseless litigation while preserving the public’s ability to obtain proper warnings about dangerous chemicals,” said Gatto. “It shouldn’t cost California’s small businesses thousands of dollars because of issues with a $20 sign.”